Ok. So Sen. Micha (R-FL) has tabled the idea of privitization of Amtrak at this time. But, my question is, isn't the privatization of Amtrak a betrayal of the original legislation to relieve private companies of bearing the burden? I know it is not like any of the 1970 companies are around today, at least not in the same forms as then, but wasn't the inferred promise that new private enterprise would not show up freight private enterprise in relieving them of the passenger burden? That even though none of those companies are around to come forward to explore operating today's passenger services, looking for private owner/operators is not in the spirit of the law if not in fact in violation of the law? So, wouldn't the Amtrak legislation have to be rescinded, amended, or abandoned in favor of new legislation? The ensuing debates will be between government intervention, oversight, funding, planning, chartering, etc. and private enterprise; the arguements will be if it can't make a profit, should it be done at all? and should society and economic growth be sacraficed for the lack of private profit?
Oh, yeah, I can count. So there are really many questions. But are there any real answers?
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Well, I don´t know whether there are any answers, as long as US politics and politicians seem to have a somewhat distorted view on passenger rail services. Most of them keep on crying about how much tax money Amtrak is eating up, yet no one seems to have questioned the billions of $$$ of hidden subsidies that went into air transport (and trucking, if you like).
Privatization is not the answer. The British had to learn that the hard way, and Germany still has to learn it. It finally boils down to what a society wishes to have and is prepared to pay for. In most European countries, this means a well functioning train network
Sir Madog Well, I don´t know whether there are any answers, as long as US politics and politicians seem to have a somewhat distorted view on passenger rail services. Most of them keep on crying about how much tax money Amtrak is eating up, yet no one seems to have questioned the billions of $$$ of hidden subsidies that went into air transport (and trucking, if you like). Privatization is not the answer. The British had to learn that the hard way, and Germany still has to learn it. It finally boils down to what a society wishes to have and is prepared to pay for. In most European countries, this means a well functioning train network
The so-called hidden subsidies that went into air transport and highways have been repaid or are being paid by the users, although in some instances the repayment mechanism has been indirect, and wealthy motorists frequently subsidize less well off motorists.
Those who highlight the subsidies for airways, highways, waterways, etc. seemingly overlook the significant subsidies granted to railroads for their construction. In fact, it may be that the present value of the subsidies granted to the railroads trumps those granted to the airways, highways, and waterways because of the time frame. Moreover, under the American Reinvestment and Recover Act (ARRA), the freight railroads have received hundreds of millions of dollars to improve their plant.
Those who point to European train networks seem to overlook the financial consequences of building passenger rail systems that do not cover their costs. If the current debt crisis sweeping Europe is not a hint, I don't know what it would take to get the attention of those who espouse using Europe as a model.
By the late 60s it was clear that continuation of passenger rail by America's railroads was unsustainable. The non-refutable economic trend lines indicated that the carriers could not afford to continue running passenger trains that American's for the most part had deserted for the car and airplane.
Apparently the Nixon Administration was persuaded that a skeleton passenger train network had to be retained. Passenger trains were an American icon. So emotion trumped economics and reason. And Amtrak was born, which in retrospect was a mistake.
The railroads were going to get out of the passenger business. Most of them had scaled back their passenger services, whilst others had dropped the trains altogether. Had Amtrak not been formed, the railroads would have gone through the courts to eliminate the trains. It probably would have been a long, ugly process, but in the long run they would have succeeded. Accordingly, to argue that the railroads were relieved of their obligation to operate passenger trains seems a bit of a stretch.
The government got into the passenger railroad business for political reasons. As a result, American taxpayers have lost more than $27 billion on a system that was supposed to at least break even. On an opportunity cost basis, the price tag has been in the neighborhood of $80 billion.
At the end of the day, however, it does not make any difference. The central question is how and where does passenger rail make sense?
I would beg to differ.....It took Britain a while to figure out how and what to privatize. Germany's split up of DB and privatization of the operation of some regional service seems to be going pretty well.
Are there lessons for us to learn from this? Certainly. The chiefly revolve around whether Amtrak can ever learn to be a lean, mean, people totin', train-runnin' machine, or if they are ever to be stuck as a self-serving, go-along, get-along, gov't bureaucracy.
If they can't improve, and they have plenty of history that shows they only budge when shoved by an external force, then it's time to try something, or someone different.
I don't know why the German regional privatization model wouldn't work for Amtrak.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Sam1 Those who point to European train networks seem to overlook the financial consequences of building passenger rail systems that do not cover their costs. If the current debt crisis sweeping Europe is not a hint, I don't know what it would take to get the attention of those who espouse using Europe as a model.
I have my doubts that railroads play an important part in Europe´s debt situation. The countries with the worst debt situation, i.e. Greece has not much of a rail network. If you compare the debt situation of the US with, say, Germany, Germany sports "only" about 60 % of the per capita debt of the US, yet still continues to cash out significant amounts of subsidies for rail traffic, both commuter and long distance.
I agree that Europe cannot act as a model for the US. Distances are much shorter, making train rides more feasible. A flight from Hamburg to Frankfurt, just as an example, requires even more traveling time than a journey by train, Hamburg to Munich or Stuttgart is on par.
Sir Madog Sam1: Those who point to European train networks seem to overlook the financial consequences of building passenger rail systems that do not cover their costs. If the current debt crisis sweeping Europe is not a hint, I don't know what it would take to get the attention of those who espouse using Europe as a model. I have my doubts that railroads play an important part in Europe´s debt situation. The countries with the worst debt situation, i.e. Greece has not much of a rail network. If you compare the debt situation of the US with, say, Germany, Germany sports "only" about 60 % of the per capita debt of the US, yet still continues to cash out significant amounts of subsidies for rail traffic, both commuter and long distance.
Sam1: Those who point to European train networks seem to overlook the financial consequences of building passenger rail systems that do not cover their costs. If the current debt crisis sweeping Europe is not a hint, I don't know what it would take to get the attention of those who espouse using Europe as a model.
Spain. Spain's debt problems are related to construction of high speed rail lines. They've put a much larger chunk of their GDP into it than other countries.
Sir Madog Sam1: Those who point to European train networks seem to overlook the financial consequences of building passenger rail systems that do not cover their costs. If the current debt crisis sweeping Europe is not a hint, I don't know what it would take to get the attention of those who espouse using Europe as a model. I have my doubts that railroads play an important part in Europe´s debt situation. The countries with the worst debt situation, i.e. Greece has not much of a rail network. If you compare the debt situation of the US with, say, Germany, Germany sports "only" about 60 % of the per capita debt of the US, yet still continues to cash out significant amounts of subsidies for rail traffic, both commuter and long distance. I agree that Europe cannot act as a model for the US. Distances are much shorter, making train rides more feasible. A flight from Hamburg to Frankfurt, just as an example, requires even more traveling time than a journey by train, Hamburg to Munich or Stuttgart is on par.
The model that would is bidding out the operations like the British do with intercity routes and freight and the Germans do with the regional service. (and the US does with some commuter rail and bus operations). The trick is preserving a customer focus through specific performance measures and/or baking in some sort of profit motive based on revenue generation into the contract.
Obviously, some parts of Amtrak's operation would require greater contract payment. LD trains, for example.
What we as a society need to look at is what future does passenger rail play in the US given the political
and budgetary realities we face. In this light, passenger rail makes sense in three regions: Eastern seaboard from Maine to North Carolina centered around the NEC, upper midwest/ great lakes corridors
radiating from Chicago, and the west coast. Except for Auto Train and perhaps one or two others, LD
trains are not viable. Air travel is simply more efficient. Given the regional nature laid out here, the states
should band together for greater input and support of this service. There should be one representative
from each region on Amtrak's board, as well as representation from the AAR. The board should be free
from political cronys and micromanagement from Congress and the White House. While Amtrak needs
to function more businesslike, passenger rail will always need to be subsidized. The question is will
the benefits out weigh the cost and will revenues lessen the amount of subsidy needed.
One thing that seems to be overlooked regarding the privatization of rail services in Europe and by various proponents of open access is that the infrastructure continues to be owned and maintained by the state. How much of a hidden subsidy is implied in this arrangement may be difficult to calculate.
CSSHEGEWISCH One thing that seems to be overlooked regarding the privatization of rail services in Europe and by various proponents of open access is that the infrastructure continues to be owned and maintained by the state. How much of a hidden subsidy is implied in this arrangement may be difficult to calculate.
I recall reading in a somewhat recent Trains about how the French infrastructure company is now under pressure to show a "profit" and is raising the rent on the users to the point where expansion of the high speed system, and even the continuation of some high speed routes is in jeopardy.
It's always important to know what the goal is when you are doing something. Sometimes companies act as if their goal is to keep on keepin' on.
There are too many factual inconsistencies in Sam's post to ignore.
"The so-called hidden subsidies that went into air transport and highways have been repaid or are being paid by the users"
That is incorrect. Highways receive 51% of their funding from user fees. The rest comes from state and federal budgets. On the issues of aviation, I can't seem to find many statistics.
Source:
http://subsidyscope.org/transportation/direct-expenditures/highways/funding/analysis/
" although in some instances the repayment mechanism has been indirect, and wealthy motorists frequently subsidize less well off motorists. "
I really fail to see what you're referring to by indirect subsidies.
" Those who highlight the subsidies for airways, highways, waterways, etc. seemingly overlook the significant subsidies granted to railroads for their construction."
This has been stated over and over again. Railroads in the United States were almost entirely paid for and run privately and financed by European or Eastern U.S. investors (source:http://www.jstor.org/pss/3111573)
The only subsidies used to build railroads I recall were part of the Land-Grant act for transcontinental railroads. However, this is a subsidy which really didn't have much value within the construction of a railroad. Not to mention that The Milwaukee Road was built with zero subsidies whatsoever. None received operation subsidies as well.
(http://www.oldmilwaukeeroad.com/content/brief/page15.htm)
"In fact, it may be that the present value of the subsidies granted to the railroads trumps those granted to the airways, highways, and waterways because of the time frame."
As stated above, private companies supported by mostly private mechanisms.
"Moreover, under the American Reinvestment and Recover Act (ARRA), the freight railroads have received hundreds of millions of dollars to improve their plant. "
The reconstruction of ONE highway interchange:
125 Million USD
(http://www.dot.state.mn.us/metro/projects/169/)
"Those who point to European train networks seem to overlook the financial consequences of building passenger rail systems that do not cover their costs. If the current debt crisis sweeping Europe is not a hint, I don't know what it would take to get the attention of those who espouse using Europe as a model."
The European debt crisis is extremely complicated and began in Greece and moved next to Ireland both of which are not known for their railway investments. Credit swaps, real estate bubbles, shared currency.Curiously, if we look at this graphic, we found ourselves in worse Government deficit than our Eurozone counterparts. The very example you put forth contradicts your own argument.
(http://en.wikipedia.org/wiki/File:Goverment_surplus_or_deficit_(EU-USA-OECD).png)
(Yes, yes I know it's Wikipedia, but the graphics is completely supported by info from Eurostat)
Sam, I love to hear your opinion but points have to substantiated through evidence, not truthiness.
Thruthiness?
Sorry, my mistake.
The word I intended to type was truthiness:
"the quality of preferring concepts or facts one wishes to be true, rather than concepts or facts known to be true" (American Dialect Society, January 2006)
One key fact which the sponsor of this idea seems to have overlooked:
Before a governmental entity can be privatized, somebody in the private sector has to be willing to buy it.
I dare say that, were the United States to put Amtrak on the auction block, the only bidders would be scrappers. If the sale includes a requirement to continue operations, the only bidders would be morons.
Chuck.
ComradeTaco Sorry, my mistake. The word I intended to type was truthiness: "the quality of preferring concepts or facts one wishes to be true, rather than concepts or facts known to be true" (American Dialect Society, January 2006)
Oof ... which dialect is that? Maybe the sentiment is covered by the old-fashioned, non-dialect 'wishful thinking'?
Rep. Mica knows better than what he is trying to doll out to the public on pasgr rail. The fiction coming from him is once govt is out of the psgr business that private industry will step up and run the service as a profit business. This concept has not worked anywhere. If money were to be made in this the freight carriers would have never exited the business 40 yrs ago. Be carefull on what one wishes for. Even if Amtrak were to become a private operation--many routes would be closed down, fares would increase a large percentage. Amtrak is not perfect by any means but like it or not tranpportation, like education health and defense of the country are all responsibility of government. Our country needs a general across the board transportation policy of which the day that happens is when the Red Sea will part.
ComradeTaco There are too many factual inconsistencies in Sam's post to ignore. "The so-called hidden subsidies that went into air transport and highways have been repaid or are being paid by the users" That is incorrect. Highways receive 51% of their funding from user fees. The rest comes from state and federal budgets. On the issues of aviation, I can't seem to find many statistics. Source: http://subsidyscope.org/transportation/direct-expenditures/highways/funding/analysis/ " although in some instances the repayment mechanism has been indirect, and wealthy motorists frequently subsidize less well off motorists. " I really fail to see what you're referring to by indirect subsidies. " Those who highlight the subsidies for airways, highways, waterways, etc. seemingly overlook the significant subsidies granted to railroads for their construction." This has been stated over and over again. Railroads in the United States were almost entirely paid for and run privately and financed by European or Eastern U.S. investors (source:http://www.jstor.org/pss/3111573) The only subsidies used to build railroads I recall were part of the Land-Grant act for transcontinental railroads. However, this is a subsidy which really didn't have much value within the construction of a railroad. Not to mention that The Milwaukee Road was built with zero subsidies whatsoever. None received operation subsidies as well. (http://www.oldmilwaukeeroad.com/content/brief/page15.htm) "In fact, it may be that the present value of the subsidies granted to the railroads trumps those granted to the airways, highways, and waterways because of the time frame." As stated above, private companies supported by mostly private mechanisms. "Moreover, under the American Reinvestment and Recover Act (ARRA), the freight railroads have received hundreds of millions of dollars to improve their plant. " The reconstruction of ONE highway interchange: 125 Million USD (http://www.dot.state.mn.us/metro/projects/169/) "Those who point to European train networks seem to overlook the financial consequences of building passenger rail systems that do not cover their costs. If the current debt crisis sweeping Europe is not a hint, I don't know what it would take to get the attention of those who espouse using Europe as a model." The European debt crisis is extremely complicated and began in Greece and moved next to Ireland both of which are not known for their railway investments. Credit swaps, real estate bubbles, shared currency.Curiously, if we look at this graphic, we found ourselves in worse Government deficit than our Eurozone counterparts. The very example you put forth contradicts your own argument. (http://en.wikipedia.org/wiki/File:Goverment_surplus_or_deficit_(EU-USA-OECD).png) (Yes, yes I know it's Wikipedia, but the graphics is completely supported by info from Eurostat) Sam, I love to hear your opinion but points have to substantiated through evidence, not truthiness.
You can find support for my views in the primary source documentation, i.e. budgets and performance reports for the Highway Trust Fund (HTF) and the Federal Aviation Administration (FAA) amongst others. They contain the primary data for my conclusions. Or you can read some of my previous posts on the subject of subsidies. They draw on the same primary databases.
Bits of information taken from superficial articles do not strike me as terribly creditable. I place little trust in news accounts. They tend to be cobbled together by reporters who don't understand the issue or even where to find the relevant information. There is heaps of information regarding the Aviation Trust Fund and airport funding in the United States if one knows where to look for it.
For a variety of reasons user fees pay for a shrinking portion of the federal highway system. The biggest is the unwillingness of the Congress to raise federal fuel taxes to compensate for increased highway growth and maintenance requirements. As a result in FY10 the federal government transferred $14.7 billion from the general fund to the HTF. The FY11 transfer probably was similar, although I don't have the number yet. Who pays the money into the general fund from whence the transfers arise? For the most part it is taxpayers with a federal income tax liability, as well as persons buying goods and services from businesses with a federal income tax liability.
In FY10 46 per cent of those filing a federal income tax return paid no federal income tax. In fact, it was entirely possible for a family of four with an adjusted gross income of $50,000 to not only not pay any federal income tax but receive back a small check from the federal government. Accordingly, the taxes were paid for the most part by filers with median incomes of more than $50,000 per year, with more than 75% of the federal income taxes paid by those with adjusted gross incomes of $100,000 or more. You can find this information in the IRS statistical tables. If you know how slice and dice the numbers you will be able to verify my numbers.
There are approximately 223 million adults in the United States, being defined as persons over 18 by the U.S. Census Bureau. This data can be found in the U.S. Statistical Abstract, although it do requires some analytics to slice and dice it. Of this number approximately 210 million or 94% of adults have a driver's license. Included in this group would be people who paid federal income taxes as well as those who didn't. For analytical purposes, lets assume that the ratio is the same as the ratio of those who actually paid taxes in FY10. This means that those who paid taxes into the general fund had some of their monies transfered to the HTF, which was used to help fund the construction and maintenance of the federal highway system that benefits all those who use it, i.e. those who had a federal income tax liability in FY10 and those who did not. This is how wealthier motorists, who pay the lion's share of federal income taxes, subsidize persons down the income ladder.
But the picture gets murkier. The feds collect 18.4 cents on a gallon of gasoline and 24.5 cents on a gallon of diesel. One might think that this all goes to the HTF. Nope! Two cents goes to the Mass Transit Administration and four cents goes for general deficit reduction. Thus, motorists are subsidizing mass transit and helping to defer the deficit. You can find this information at DOT.
In Texas, where I live, state highways are funded through a variety of user fees similar to those collected by the federal government. The major fee is the state fuel tax. But not all is as it appears for 25% of the fuel taxes in Texas go to education. Not highways! And a small but growing amount goes to fund the Heartland Flyer and the Trinity Railway Express. So who is subsidizing who?
County roads, farm to market roads, city streets, etc. are funded Texas, as well as most other states, from property taxes. But some government entities get transfers from the federal and state governments. To grasp the complete picture, one would need to go through the financial statements of every city, county, and state of the United States to understand who pays for the nation's roadways. Good luck!
Information regarding the Aviation Trust Fund, as well as airport funding in the United States, is available if you know how to dig it out. If you want an in-depth view of the subject, you should consult the financial reports for each airport in the United States in addition to the financial information provided by the federal and state governments. Over the years I have looked at them for the major airports in Texas. They are available on-line. And if you want to know how the European rail system is funded, again the information is available from financial and operating reports that are available on line. Most of them are in English.
When you can cite the primary sources and put forth a cogent argument in your words, I might take your criticism of my views with something other than a grain of salt.
SFbrkmn Rep. Mica knows better than what he is trying to doll out to the public on pasgr rail. The fiction coming from him is once govt is out of the psgr business that private industry will step up and run the service as a profit business. This concept has not worked anywhere. If money were to be made in this the freight carriers would have never exited the business 40 yrs ago. Be carefull on what one wishes for. Even if Amtrak were to become a private operation--many routes would be closed down, fares would increase a large percentage. Amtrak is not perfect by any means but like it or not tranpportation, like education health and defense of the country are all responsibility of government. Our country needs a general across the board transportation policy of which the day that happens is when the Red Sea will part.
Why does the country need an intercity passenger rail system? Especially a skeleton long distance system that is used by approximately one per cent of those who travel between the cities served by the long distance trains.
The U.S. should develop passenger rail in relatively high density, short corridors, where the cost to expand the airways and highways is prohibitive. But to equate passenger rail with defense, education, health, etc. is a bit over the top.
"You can find support for my views in the primary source documentation, i.e. DOT budgets and performance reports for the Highway Trust Fund (HTF) and the Federal Aviation Administration (FAA) amongst others. They contain the primary data for my conclusions. Or you can read some of my previous posts on the subject of subsidies. I place little trust in news accounts. They tend to be cobbled together by reporters who simply don't understand the issue or even where to find the information. "
None of the sources I gave you were news accounts.
"It is true that user fees pay for a shrinking portion of the federal highway system for a variety of reasons. The biggest is the unwillingness of the Congress to raise the federal fuel taxes to compensate for increased highway growth and maintenance requirements. As a result in FY10 the federal government transferred $14.7 billion from the general fund to the HTF. Who pays the money into the general fund. Taxpayers with a federal income tax liability as well as those who buy the goods and services of corporations and businesses with a tax liability."
So the cost of highways and highways alone is not being repaid by the users.
"In FY10 46 per cent of those filing a federal income tax return paid no federal income tax. In fact, it was entirely possible for a family of four with an adjusted gross income of $50,000 to not only not pay any federal income tax but receive back a small check from the federal government. Accordingly, the taxes were paid for the most part by filers with median incomes of more than $50,000 per year, with more than 75% of the federal income taxes paid by those with adjusted gross incomes of $100,000 or more. You can find this information in the IRS statistical tables. If you know how slice and dice the numbers you will be able to verify my numbers. "
That's a lovely little statistic. However, those who pay no federal income pay state payroll tax, federal payroll tax, property taxes and state/local sales taxes. Parents supporting two children on less than $50,000 a year (even less when applying the aforementioned taxes ) is a terrifying prospect, particularly with many four year college programs costing as much as a small home. Perhaps it is not a travesty that 46% percent don't pay, but rather it is a travesty that 46% don't have enough to pay.
"There are approximately 223 million adults in the United States, being defined as persons over 18 by the U.S. Census Bureau. This data can be found in the U.S. Statistical Abstract, although it do requires some analytics. Of this number approximately 210 million or 94% of adults have a driver's license. Included in this group would be people who paid federal income taxes as well as those who didn't. For analytical purposes, lets assume that the ratio is the same as the ratio of those who actually paid taxes in FY10. This means that those who paid taxes into the general fund had some of their monies transfered to the HTF, which was used to help fund the construction and maintenance of the federal highway system that benefits all those who use it, i.e. those who had a federal income tax liability in FY10 and those who did not. This is what I mean by indirect payment. It is a subsidy to the extent that wealthy motorists, who pay income taxes, subsidize those who don't, at least on the federal highways."
So the Federal government subsidizes the construction and maintenance of highways through taxes general taxes as opposed to user fees.
"But the picture gets murkier. The feds collect 18.4 cents on a gallon of gasoline and 24.5 cents on a gallon of diesel. One might think that this all goes to the HTF. Nope! Two cents goes to the Mass Transit Administration and four cents goes for general deficit reduction. Thus, motorists are subsidizing mass transit and helping to defer the deficit. You can find this information at DOT."
But the motorists themselves are being subsidized by the federal government.
"In Texas, where I live, state highways are funded through a variety of user fees similar to those collected by the federal government. The major fee is the state gasoline tax. But not all is as it appears for 25% of the fuel taxes in Texas go to education. Not highways! And a small but growing amount goes to fund the Heartland Flyer and the Trinity Railway Express. So who is subsidizing who?"
However,state fuel taxes consist of only 32.1% of the total appropriations for Texas Highways.Much of the remaining sum comes from the HTF which is running a deficit even with poor maintenance. So, it's a massive subsidization mess involved at the federal and state levels funded by curiously complex mechanisms which themselves are inadequate to provide proper upkeep. Looking purely at the 80 billion dollar funding gap which will occur with inaction by 2030,we find that the subsidies are not being repaid or being paid by users.
"County roads, farm to market roads, city streets, etc. are funded in most places from property taxes. But in many places they get transfers from the federal and state governments. To grasp the complete complete, you, not to mention the reporters for the so-called evidence that you cited, would have to go through the financial statements of every city, county, and state of the United States to get a complete picture of who pays for the nation's roadways. Good luck!"
Reporters? Since when is an Assistant Professor at MIT a reporter?
It's the equivalent of asking someone if they watched the nightly news only to receive a retort about the unreliability of using telegram-based wire services. Entirely non sequitur.Regardless, you say yourself that local roads are funded from a common tax upon all those apply as opposed to users, or in other words, subsidized. With this final statement, you admit that you don't know where the money comes from. So how can you say
if you clearly do not know?
"Information regarding the Aviation Trust Fund, as well as airport funding in the United States, is available if you know how to dig it out. If you want an in-depth view of the subject, you should consult the financial reports for each airport in the United States. Over the years I have looked at every one for the major airports in Texas. They are usually available on-line. And if you want to know how the European rail system is funded, again the information is available from financial and operating reports that are available on line. Most of them are in English."
None of your points are defended here. You simply state that the mechanisms that fund roadways are extremely complex and involve quite a bit of government money which does nothing further to substantiate your opinions
Whichever way you look at it, you cannot have a functioning, state-of-the art passenger rail network at no cost to society, same as you cannot have a highway network or a network of airlines and airports. Someone has to pick up the tab for it. Which tab is being picked up and paid is part of the democratic process, hopefully not only based on short-term financial issues, but on long-term necessities also based on environmental perspectives.
With gas prices as low as they still are in the US, I am afraid that decisions are based on near-sighted "economics", leaving the better part of the bill to be paid by future generations.
ComradeTaco "You can find support for my views in the primary source documentation, i.e. DOT budgets and performance reports for the Highway Trust Fund (HTF) and the Federal Aviation Administration (FAA) amongst others. They contain the primary data for my conclusions. Or you can read some of my previous posts on the subject of subsidies. I place little trust in news accounts. They tend to be cobbled together by reporters who simply don't understand the issue or even where to find the information. " None of the sources I gave you were news accounts. "It is true that user fees pay for a shrinking portion of the federal highway system for a variety of reasons. The biggest is the unwillingness of the Congress to raise the federal fuel taxes to compensate for increased highway growth and maintenance requirements. As a result in FY10 the federal government transferred $14.7 billion from the general fund to the HTF. Who pays the money into the general fund. Taxpayers with a federal income tax liability as well as those who buy the goods and services of corporations and businesses with a tax liability." So the cost of highways and highways alone is not being repaid by the users. "In FY10 46 per cent of those filing a federal income tax return paid no federal income tax. In fact, it was entirely possible for a family of four with an adjusted gross income of $50,000 to not only not pay any federal income tax but receive back a small check from the federal government. Accordingly, the taxes were paid for the most part by filers with median incomes of more than $50,000 per year, with more than 75% of the federal income taxes paid by those with adjusted gross incomes of $100,000 or more. You can find this information in the IRS statistical tables. If you know how slice and dice the numbers you will be able to verify my numbers. " That's a lovely little statistic. However, those who pay no federal income pay state payroll tax, federal payroll tax, property taxes and state/local sales taxes. Parents supporting two children on less than $50,000 a year (even less when applying the aforementioned taxes ) is a terrifying prospect, particularly with many four year college programs costing as much as a small home. Perhaps it is not a travesty that 46% percent don't pay, but rather it is a travesty that 46% don't have enough to pay. "There are approximately 223 million adults in the United States, being defined as persons over 18 by the U.S. Census Bureau. This data can be found in the U.S. Statistical Abstract, although it do requires some analytics. Of this number approximately 210 million or 94% of adults have a driver's license. Included in this group would be people who paid federal income taxes as well as those who didn't. For analytical purposes, lets assume that the ratio is the same as the ratio of those who actually paid taxes in FY10. This means that those who paid taxes into the general fund had some of their monies transfered to the HTF, which was used to help fund the construction and maintenance of the federal highway system that benefits all those who use it, i.e. those who had a federal income tax liability in FY10 and those who did not. This is what I mean by indirect payment. It is a subsidy to the extent that wealthy motorists, who pay income taxes, subsidize those who don't, at least on the federal highways." So the Federal government subsidizes the construction and maintenance of highways through taxes general taxes as opposed to user fees. "But the picture gets murkier. The feds collect 18.4 cents on a gallon of gasoline and 24.5 cents on a gallon of diesel. One might think that this all goes to the HTF. Nope! Two cents goes to the Mass Transit Administration and four cents goes for general deficit reduction. Thus, motorists are subsidizing mass transit and helping to defer the deficit. You can find this information at DOT." But the motorists themselves are being subsidized by the federal government. "In Texas, where I live, state highways are funded through a variety of user fees similar to those collected by the federal government. The major fee is the state gasoline tax. But not all is as it appears for 25% of the fuel taxes in Texas go to education. Not highways! And a small but growing amount goes to fund the Heartland Flyer and the Trinity Railway Express. So who is subsidizing who?" However,state fuel taxes consist of only 32.1% of the total appropriations for Texas Highways.Much of the remaining sum comes from the HTF which is running a deficit even with poor maintenance. So, it's a massive subsidization mess involved at the federal and state levels funded by curiously complex mechanisms which themselves are inadequate to provide proper upkeep. Looking purely at the 80 billion dollar funding gap which will occur with inaction by 2030,we find that the subsidies are not being repaid or being paid by users. "County roads, farm to market roads, city streets, etc. are funded in most places from property taxes. But in many places they get transfers from the federal and state governments. To grasp the complete complete, you, not to mention the reporters for the so-called evidence that you cited, would have to go through the financial statements of every city, county, and state of the United States to get a complete picture of who pays for the nation's roadways. Good luck!" Reporters? Since when is an Assistant Professor at MIT a reporter? It's the equivalent of asking someone if they watched the nightly news only to receive a retort about the unreliability of using telegram-based wire services. Entirely non sequitur.Regardless, you say yourself that local roads are funded from a common tax upon all those apply as opposed to users, or in other words, subsidized. With this final statement, you admit that you don't know where the money comes from. So how can you say "The so-called hidden subsidies that went into air transport and highways have been repaid or are being paid by the users" if you clearly do not know? "Information regarding the Aviation Trust Fund, as well as airport funding in the United States, is available if you know how to dig it out. If you want an in-depth view of the subject, you should consult the financial reports for each airport in the United States. Over the years I have looked at every one for the major airports in Texas. They are usually available on-line. And if you want to know how the European rail system is funded, again the information is available from financial and operating reports that are available on line. Most of them are in English." None of your points are defended here. You simply state that the mechanisms that fund roadways are extremely complex and involve quite a bit of government money which does nothing further to substantiate your opinions
This response is not worthy of further comment.
tomikawaTT One key fact which the sponsor of this idea seems to have overlooked: Before a governmental entity can be privatized, somebody in the private sector has to be willing to buy it. I dare say that, were the United States to put Amtrak on the auction block, the only bidders would be scrappers. If the sale includes a requirement to continue operations, the only bidders would be morons. Chuck.
You are right. Nobody is going to bid anything to take over an Amtrak LD route. But, that's not the beginning and end of privatization.
I think the definition of "privatization" is where we are getting all tangled up. In terms of rail passenger service, a subsidy of some sort is required. It could come from an owning infrastructure company ala Germany or it could come in the form of a "negative bid". That is, "how much do I have to pay you in order for you to provide this service". Sort of like a contract operator except the winner gets to set fares, market service and keep the revenue.
Don,
While I agree with the point you are making, I think it is important to note that congress could have simply picked up the operating losses the railroads were incurring, and providing capital funds for infrastructure maintenance and improvement rather than create ATK in the form that they did. Had they done this, ATK would have been five guys deciding which routes to operate and approving capital requests.
The question I think is why congress did what they did. I would posit it was for control and power, which is what our government has come to be about. What you are suggesting makes sense and is probably the most realistic "privatization" model that exists. My prediction is no change until congress wakes up about our unsustainable Federal Budget Deficit. To fix that we have to stop doing a lot of stupid stuff and ATK will be part or a long list of real cuts.
The only ATK asset of importance is the NEC and its associated line to Harrisburg. If I were an ATK partisan, I would be worried about how to keep the NEC running without Federal money.
Mac
PNWRMNM Don, While I agree with the point you are making, I think it is important to note that congress could have simply picked up the operating losses the railroads were incurring, and providing capital funds for infrastructure maintenance and improvement rather than create ATK in the form that they did. Had they done this, ATK would have been five guys deciding which routes to operate and approving capital requests.
This is essentially how Amtrak operated in the beginning. Amtrak did own the equipment, though, and did consolidate maintenance and overhaul locations. But, the operating crews were still provided by the host road for the first decade or so.
It's also how most of the commuter agencies started life.
It didn't work out very well in either case. The RRs felt they were being shortchanged on their total costs and they were rather disinterested in finding and negotiating savings or improving service. They just wanted out altogether.
From what I've read, the Nixon admin and Congress did what they did with cross purposes. There were some "true believers", such as the Sec of Trans Volpe, who thought that the whole thing could be managed to a net benefit (through economies of scale, phasing out most LD trains, and adding in more corridor trains) and those that have been whispered to believe that is would be a convenient way to kill it all in one fell swoop a few years out. Volpe actually got a bill to Congress by smoking it past Nixon's notable toadies.
In the end, both camps were wrong about how it would play out.
Certainly the railroads provided T&E crews for years, but that is not the same as what you previously proposed, which was that the private operator would control fares and service; ATK controlled fares and service from the begining.
You are correct the railroads never cared about ATK. I would add that they never had any reason to. This simply illustrates the point I was trying to make, which is that congress made a choice to set ATK up the way they did. There is no reason to believe anyone writing the bill much cared, or even had a clue in the economic sense, about the incentive structure they were creating.
You are proposing a different incentive structure. Take credit for that.
Sam
" This response is not worthy of further comment"
Lovely. We can end with the conclusion that the cost of interstates,state highways and local roads are not entirely taken on by users.
Regardless, no company would want to take up competition against subsidized alternatives. No company would want Amtrak.
ComradeTaco Sam Regardless, no company would want to take up competition against subsidized alternatives. No company would want Amtrak.
You are right. But, lets bid out piece of Amtrak where the winner gets to own and control everything (and keep the revenue). Guy who needs the smallest subsidy wins. Think anybody could underbid Amtrak? They are getting underbid everywhere in the commuter operation contract arena. I suspect the same players partnered up with the right people would do the same.
How about Herzog plus Marriott running all the western LD trains?
I would think there would be a tad bit of difficulty running over sleepers if only because no companies have had much experience with the matter, but I think it would be a very plausible arrangement. I'm thinking the rest of Amtrak could still be a public entity focused on medium speed corridor development. Sort of like the Harrisburg line (except with new electrification).
oltmannd ComradeTaco: Sam Regardless, no company would want to take up competition against subsidized alternatives. No company would want Amtrak. You are right. But, lets bid out piece of Amtrak where the winner gets to own and control everything (and keep the revenue). Guy who needs the smallest subsidy wins. Think anybody could underbid Amtrak? They are getting underbid everywhere in the commuter operation contract arena. I suspect the same players partnered up with the right people would do the same. How about Herzog plus Marriott running all the western LD trains?
ComradeTaco: Sam Regardless, no company would want to take up competition against subsidized alternatives. No company would want Amtrak.
This is the scheme followed by the Australians with the Great Southern Railway, which is a stockholder company that operates the Indian Pacific, Ghan, and Overland. Winning and keeping the contract was and is predicated on keeping the subsidy at the lowest level reasonable. The level of service on these trains is heads and shoulders above the level of service on Amtrak.
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